Compliance and efficiency


July 8, 2014

Chris Prior is manager, sales and distribution at Bridgewater Equity Release

Whenever we hold our round the table events for advisers I am always surprised at the depth and breadth of topics we cover, and there is always a sense from certain attendees that the way they currently conduct their business or interact with clients can be amended to be more efficient or more compliant, or both.

This was certainly the impression I got from our most recent event held in Plymouth earlier this month when the topic turned to the issue of drawdown equity release products and the fear about what clients could do as soon as they secured the original amount of cash and the drawdown account that is accessible to them.

It has been a topic raised at previous events and one which worries advisers because it could result in a client drawing down significant sums of money which they simply did not require throughout the advice process itself. There is also the increased pressure which can be placed on clients from outside sources to access the drawdown amounts before they actually need it.

One adviser at the round table gave us an example of a client who had access to a drawdown and had been put under severe pressure by one of their children to access the fund for their benefit.

Luckily the client contacted the adviser before they went through with it, rather than going direct to the provider, and they were able to speak to them and get to the bottom of why they actually needed the money.

The truth came out and the adviser managed to convince the client not to go ahead given that the money was only for the child’s benefit rather than any actual need they had. It was also apparent that there were other siblings involved who would have been negatively impacted if the client had drawn down the money.

It would seem that the adviser stepping in and asking, “Do you really want to do this?” was the first step in putting doubt in the client’s mind and eventually getting them to see the wood from the trees.

It was this example which brought home to many others around the table the importance of being able to speak to a client before they make such a significant decision.

And while there is no compulsion on the part of the client to do so it was pointed out that inserting a line into the suitability report asking them to make contact should they need more cash could be a useful starting point for all advisers. Those that did not have such an insertion went away with a useful example of how advisers can look to keep in contact with their clients especially when they could be making a significant mistake – never mind the impact such a drawdown could have, for example, on their benefits situation.

To my mind this sharing of views was a prime example of how advisers can disseminate good practice across the industry. It’s a question of how do you stop clients from making mistakes if they are not aware they can come back for advice rather than go straight to the provider.

It’s not quite the same situation but when we have existing clients come back to us looking to release more equity – a guarantee we provide to all those who have not released 100% of the value – we immediately send them back in the direction of the adviser who recommended the plan in the first place. And if they don’t want to go back to them – for whatever reason – we send them to the Equity Release Council to source another adviser.

I’m unsure whether other providers take this approach but it would certainly help both the adviser and the client for them to do this.

Even if there has been a short space of time since the original advice was provided, an individual’s circumstances can change considerably and therefore securing professional advice prior to making any decision can make all the difference.

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